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Germany: economy on the road to recovery

August 25, 2020 3:35 PM, Der AUDITOR
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FRANKFURT/MUNICH. The mood among business leaders in Germany is still on the upswing as the ifo Business Climate index rose to 92.6 points in August, after 90.4 points in July. Moods, however, differ with many companies still struggling.

Thumbs up for Germany's economy in August

Companies surveyed assess their situation a lot better than in July and expectations for the coming months are slightly more optimistic. As Clemens Fuest, President of the ifo Institue has recently stated, "[t]he German economy is on the road to recovery. In manufacturing, the business climate improved considerably. Companies' assessments of their current situation jumped higher. Nevertheless, many industrial companies still consider their current business to be poor. The outlook for the coming months was again more optimistic. Order books are filling once more." This certainly is good news for Germany's economy.

Moods differs widely
Moods, however, vary greatly throughout the different sectors. In manufacturing the ifo business climate, which is based on 2015 as an average, improved from -12.1 in July to -5.4 in August. In trade the climate has, however, more or less flattened from -5.1 in July to -4.8 in August. Although companies are more satisfied with the present situation, the outlook for the next few months remains pessimistic and in wholesale the climate has even taken another dip. Prospect are, by contrast highly encouraging in the service sector as the business climate has notbaly risen from +2.1 to +7.8. Service prodivers are much happier with the present situation and are optimistic regarding the next six months. In construction, the climate has continued to rise from -2.5 to 0.0. Although construction companies are happier with the current situation, their expectations are still not very high for the next six months. The ifo Business Climate is considered the leading economic indicator for Germany and is published on a monthly basis, based on a survey of around 9,000 companies.

 

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